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The RFG Weekly Wealth Report

April 30, 2018

We just finished the busiest week of 1st quarter earnings season, and although many companies shared positive results, stock indexes experienced modest declines. The S&P 500 lost 0.01%, the Dow dropped 0.62%, and the NASDAQ gave back 0.37%. International stocks in the MSCI EAFE decreased by 0.39%.


At the 1904 St. Louis World's Fair, a Syrian concessionaire was selling a crisp, waffle-like pastry -- zalabis -- in a booth right next to an ice cream vendor. Because of ice cream's popularity, the vendor ran out of dishes. The zalabis concessionaire quickly rolled one of his wafer-like waffles in the shape of a cone, and gave it to the ice cream vendor. The vendor put some ice cream in it and the ice cream cone was on its way to becoming the great American institution that it is today.


Last week provided a variety of information for investors to take in. On Friday, we received the initial reading of 1st-quarter Gross Domestic Product (GDP). The data came in more positive than analysts expected, with the economy experiencing 2.3% growth. The latest employment readings also showed costs for benefits and pay rising at the fastest pace in a decade. On the geopolitical front, the leaders of North and South Korea met for historic talks that could result in denuclearizing the Korean peninsula.

As we continue to watch these developments, we want to explore what's behind our current corporate earnings season.

A Deeper Analysis of Corporate Earnings

So far, this earnings season is the best on record. Of the S&P 500 companies with published data, 79.4% of them beat expectations. The outperformance is significant, too. On average, companies are 7.95% higher than projected.

Despite these positive results, stock prices did not rise in reaction. Companies that beat expectations have only experienced an average of a 0.3% equity increase in the first day after their report. The disconnect between high earnings and low stock increases may be surprising. But when you look closer, lingering questions about corporate health are weighing on many investors' minds:

  • Will higher costs - including wages and materials - decrease their profits moving forward?
  • Could increasing treasury yields raise the cost of their debt?
  • Will they continue to benefit from the new U.S. tax law, or is this earnings season an anomaly?

No one can say for sure what is on the horizon for corporate performance. On one hand, concerns about growing costs and inflation could erode investor confidence and hamper the markets' ability to regain previous highs. On the other, consumer sentiment remains high - and experts predict that each year until at least 2020, S&P 500 companies will have double-digit growth.

Looking ahead, we will monitor many different details to gain more insight into what the future may hold, including bond yields, wage costs, and inflation. For now, please contact us anytime if you have questions about current market conditions or your plans for the future.



According to new research published in the journal Cell Stem Cell, the brains of healthy older people - including those well into their 70s - can generate as many neurons, or nerve cells, as younger people do.

Researchers from Columbia University and the New York State Psychiatric Institute autopsied the brain's hippocampus, which processes learning and memory, in 28 individuals ranging from ages 14 to 79. All the subjects had died suddenly, after previously being in good health, and none had cognitive impairment.

Researchers found that older people have the similar ability to make thousands of new hippocampal neurons from progenitor cells as younger people do. The brains of the oldest individuals in the study had continued to make new neurons up until death, the researchers found, and the hippocampus was equivalent in volume across ages.

The older brains didn't perform quite as well in some other ways. They didn't form as many blood vessels and potentially had less ability of new neurons to make connections.

Nonetheless, findings about the brain's continued ability to make neurons may mean that many older people remain more cognitively and emotionally intact as they age than commonly believed.



For so many of us, family is paramount. You probably expect to use your wealth to take care of your family in the here and now - health care, travel, college tuition and the like. But chances are you haven't thought nearly as much about positioning your assets so they're ready and able to help the people you love after you're gone.

You can get on track by focusing on two main areas of estate planning: wills and trusts.

Everyone should have a will

A will should be the basic foundation of every estate plan - the starting point for a well-conceived strategy to transfer assets at death.

A will identifies precisely what you want to have happen to your assets and estate. Dying without a will means you have decided that the state knows what's best for you and your family. In addition, dying without a will means you want to make the settling of your estate as difficult, as costly and as public as possible.

As with any decision, there are both positives and negatives to a will. That said, we strongly believe the benefits of writing a will far outweigh the drawbacks.


  • You decide on the disposition of your hard-earned wealth.
  • Estate taxes are mitigated - especially when the will is part of a broader estate plan.
  • You specify who the fiduciaries will be.


  • You have to accept that one day - far in the future - you just might die.
  • There is a legal cost associated with writing up a will and with estate planning.

Trust in trusts

The second component of a smart estate plan is often a trust. A trust is nothing more than a means of transferring property to a third party - the trust. Specifically, a trust lets you transfer title of your assets to trustees for the benefit of the people you want to take care of - aka your selected beneficiaries. The trustee will carry out your wishes on behalf of your beneficiaries.

Broadly speaking, there are two types of trusts: living (established while you are alive) and testamentary (created by your will after you've passed). Living trusts are becoming more and more popular to avoid the cost of probate. In the probate process, your representatives "prove" the validity of your will. The probate process also gives any creditors the opportunity to collect their due before your estate is passed to your heirs. There may be a long delay in settling your estate as it goes through probate. Probate can also be costly.

A living trust can avoid or mitigate the effects of probate. It is a revocable trust that you establish and of which you are also typically the sole trustee. The assets in your living trust avoid probate at death, and are instead distributed to your heirs according to your wishes.

A trust may be appropriate for you if:

  • Your beneficiaries are unwilling or unable to handle the responsibilities of an outright gift (investing the assets, spending the gift wisely, etc.).
  • You want to keep the amount and the ways your assets are distributed to heirs a secret.
  • You want to delay or restrict the ownership of the assets by the beneficiary.
  • You need to provide protection from your and/or your beneficiary's creditors and plaintiffs.
  • You want to lower your estate taxes.

Your next move

We recommend that your estate plan be reviewed every year or two. The review should be conducted by a high-caliber wealth manager or tax professional - one who takes the time to learn what's changed since you put your solutions in place, assess how those changes might impact your strategy, and make recommendations for getting your solutions current and in accordance with your wishes.